The kind of future your child can have is in your hands. If you are worried that funding your child’s growing needs will eat into your savings, think again. Consider a mix of safe and moderate-risk investment options for the long term that will grow your savings into a bigger corpus that will come to your child’s aid. Be it for education, daily living expenses, assets like a car or bike, relocation to another city, and more, you can use this wealth to finance all your child’s needs and wants.
Read on to find out about ideal long-term investment options for your child.
Invest in an FD (Guaranteed Fixed Return with Lowest Risk)
With an investment option such as fixed deposits for children, you have assured returns, giving you the time to securely build on your savings. This option has a flexible tenor, high FD interest rates of up to 8.40% when you sign up with companies and the flexibility to withdraw money prematurely.
Say you deposit an amount of Rs.2 lakh for 60 months at 7.60%. At the time of maturity, you’ll get an amount of Rs.2,91,831. You have two options: Either take the money out or renew the scheme. If you renew it with NBFCs Fixed Deposits, you can get a higher rate of interest up to 0.25%. Think about it long term.
You are not just allowing your money to grow at a steady rate, but also making it easily available to you, at any time. This makes an FD for your child the safest bet to secure his or her future. You can even calculate your maturity amount using an FD calculator and know just how much you will get at the lapse of the tenor.
Consider saving up for a property (Can Earn Passive Income Also)
This is one of the best long-term investments you can make for your child. It is also one of the safest as land is not infinite, but demand will always grow, increasing the value of your purchase substantially over the years.
Though you will need to save up to buy a house, or at least plan for the down payment and finance your home with a loan, you can earn regular income by leasing your property out to tenants. This way, you can also take care of your child’s needs with the money rent you earn.
Go for mutual funds via SIPs (Invest In Stock Market)
Using small monthly investments in high-earning yet safe mutual funds like debt funds, you can start building a large corpus without straining your income. Since your investment in recurring and handled by professionals, your risk is lowered, and since you are investing for the long-term, you stand to gain more.
However, remember that mutual funds are subject to a certain amount of risk. So, choose your fund carefully and research the fund’s past performance before investing. If you want to save on taxes, choose ELSS mutual funds.
Choose Gold ETFs instead of gold
Avoid investing in physical gold or jewelry because of the difficulty in reselling it. Opt for Gold ETFs instead, which is gold in an electronic form. These are open-ended funds that allow you to buy units equivalent to one gram of gold. They are also easier to sell and you don’t have to worry about impurity. You get a return of around 10% if you invest in gold, though the prices fluctuate according to the market.
Sign up for the government or public-sector bonds
This debt security is a less risky investment alternative to stocks as their profitability is much easier to predict. Long-term bonds provide better returns than short-term ones and also offer you regular interest payout, usually semi-annually or annually. However, remember that you stand to make the most profit by holding on the bond until maturity. Otherwise, you may suffer a capital loss.
Start a Public Provident Fund account (Create Long-Term Wealth)
This is the preferred choice of investment for many parents because of the minimum deposit is affordable. This means you can open a PPF account for as little as Rs.100. You must put in at least Rs. 500 every year for a period of 15 years and the interest you get on it is a steady 7.8%. The only downside is you cannot withdraw the money until the end of 7 years.
When starting a PPF, learn why fixed deposits are considered better investment avenues than PPF and then make a wise decision. Using these 6 investment options, you can easily save up to secure your child’s future.